State Government

Arise members had two big reasons to celebrate Thursday, as Gov. Kay Ivey signed a pair of bills that finalize policy wins related to our organization’s 2018 issue priorities. One law will halt (at least for now) an effort to create a new state tax break for private school tuition in Alabama, while the other will help ease the transportation burden that can result from unpaid court fines and fees.

Arise members win push to stop state tax break for private school tuition

Arise members deserve an enormous share of the credit for blocking that tax break. That proposal would have turned 529 plans – originally designed to encourage long-term college savings – into vehicles to subsidize private schools at the expense of public education. The change would have cost the Education Trust Fund millions of dollars a year.

The tax break easily passed the House and appeared to be sailing toward legislative passage – until hundreds of Arise members and other advocates sounded the alarm, flooding the Senate with emails and phone calls in opposition to the plan. That pressure worked: Last week, the Senate amended HB 251 to remove the language that would have created the tax break for private school tuition. The House quickly agreed and sent the revised legislation to Ivey for her signature.

Another new law enacted Thursday stands to lift employment barriers and expand transportation access for thousands of Alabamians. SB 55, sponsored by Sen. Clyde Chambliss, R-Prattville, will allow the state to issue hardship driver’s licenses to thousands of people, including many who have had their licenses suspended or revoked for convictions unrelated to driving.

Under SB 55, those Alabamians could receive hardship driver’s licenses – allowing them to drive on a limited basis – if they can demonstrate to the satisfaction of the Alabama Law Enforcement Agency that they are not a risk to public safety and cannot obtain other reasonable transportation. People convicted of drunken driving or reckless driving would be ineligible for hardship licenses.

The new law could give thousands of Alabamians a legal way to drive to work, go to doctor’s appointments and fulfill other essential tasks of everyday life. And it represents an important breakthrough in Arise’s work to ease the burden of criminal justice debt on low-income families.

Update: Gov. Kay Ivey signed HB 251 into law on March 22 – without the language that would have cost public schools millions of dollars a year. Thank you to all the Arise members and everyone else who helped protect education funding in Alabama!

Great news, y’all: Arise members just helped save millions of dollars a year for Alabama’s public schools! A few weeks ago, we sounded the alarm about HB 251, sponsored by Rep. Ken Johnson, R-Moulton. At that time, the bill included language that would have allowed Alabamians to use education savings accounts known as 529 plans to receive a state income tax break on money used for K-12 private school tuition.

Hundreds of Arise members sprang into action. They flooded the Senate with emails and phone calls opposing this misguided plan to turn 529 plans – originally designed to encourage long-term college savings – into vehicles to subsidize private schools at the expense of public education.

This proposal had been speeding toward enactment – but Arise members helped stop it in its tracks. This week, the Senate amended HB 251 to remove the provisions that would have created a tax break for private school tuition. The House agreed to that change Thursday and sent the bill to Gov. Kay Ivey – without the language that would have cost the Education Trust Fund millions of dollars a year.

This win for public schools across our state couldn’t have happened without our members. It was proof once again that when everyday folks speak up together for what’s right, we can get results. Thank you so much to all of you who helped defeat this proposal, and to all of you who continue to support Arise’s work to build a better Alabama for all.

In a setback for renters throughout Alabama, the House voted 78-4 Thursday to erode protections for the state’s tenants. HB 421, sponsored by Rep. David Sessions, R-Grand Bay, now moves to the Senate.

HB 421 would reduce the number of curable, or fixable, breaches of a lease in a year from the current four to just two. The bill also would change state law to allow landlords to kick out tenants if a breach of the same provision, no matter how minor, occurs twice in a six-month period.

This bill would allow landlords to force tenants from their homes over just two or three minor mistakes. Families could be ousted as few as seven days after repeating the same minor offense, such as letting vehicle tags expire, no matter how quickly they remedy the problem. Another example: If within one year, a person parks in the wrong space, cares for a friend’s pet overnight in a pet-free apartment, and changes their own oil in the parking lot, this bill would allow eviction proceedings to begin under many rental agreements.

One bright note Thursday was when Rep. Merika Coleman, D-Birmingham, successfully amended HB 421 to remove language that would have hurt tenants even more. (Coleman was one of four House members to vote against the final bill.)

HB 421 originally would have given Alabama renters just three days to correct a lease violation, down from the current seven. It also would have cut the required notice period for lease termination from seven days to three days. But Coleman’s amendment stripped both of those harmful changes from the bill and clarified that the “seven days” in those two provisions means seven business days. The House adopted her amendment 81-5.

Despite Coleman’s amendment, the bill remains hostile to the interests of renters across the state. Alabama’s 2006 Landlord-Tenant Act set out a balanced set of protections for both sides of rental relationships. But HB 421 would tilt those scales back in landlords’ favor at the expense of more than 1 million everyday Alabamians who rent their homes.

Payday loan borrowers across Alabama would get more time to repay and collectively would save tens of millions of dollars a year under a bill that the state Senate passed 20-4 Thursday. The 30-days-to-pay bill – SB 138, sponsored by Sen. Arthur Orr, R-Decatur – now goes to the House.

SB 138 would extend Alabama’s repayment period for payday loans to 30 days, up from as few as 10 days now. The bill would ease the financial pressure on struggling borrowers by reducing the maximum annual percentage rate (APR) on payday loans in Alabama from 456 percent to about 220 percent. That change would mean a significant reduction in the amount that Alabamians pay each year in payday loan fees, which was more than $100 million last year alone, according to Alabama Appleseed. Click here to learn more about how SB 138 would help Alabama borrowers.

The Senate’s vote for the bill followed an hour-long filibuster by Sen. Tom Whatley, R-Auburn, who claimed the measure would force many payday lenders out of business. Orr denied that closures would be widespread and said that employees of any lenders that did close likely would have little trouble finding a new job, given Alabama’s relatively low unemployment rate.

Arise members played an important role in urging SB 138’s passage Thursday. Numerous Arise members from Whatley’s district quickly sprang into action during the filibuster, calling his office to ask him to allow SB 138 to come to a vote. Reformists from the Alliance for Responsible Lending in Alabama (ARLA), of which Arise is a member, also contacted Whatley with the same message. Near the end of his filibuster, Whatley acknowledged on the Senate floor that he was receiving many phone calls from advocates for payday lending reform.

Senate passage did not come without confusion and tension. Immediately after the 20-4 vote in favor of SB 138, Orr made a procedural motion to try to block a second vote on the bill – but it failed on an 11-11 vote. (“Yes” votes on that list were to prevent the Senate from revisiting its vote to pass the bill.)

The final episode of the vote trilogy came moments later, when an effort to reconsider Senate passage of the bill lost 14-13. (“No” votes on that list were to prevent the Senate from revisiting its vote to pass the bill.) Senate President Pro Tem Del Marsh, R-Anniston, who was presiding over the Senate, cast a dramatic tie-breaking vote to prevent reconsideration of SB 138 and send the bill to the House.

A good month for public transportation advocates in Alabama continued Wednesday when a state House committee approved legislation to create an Alabama Public Transportation Trust Fund. SB 85, sponsored by Sen. Rodger Smitherman, D-Birmingham, now goes to the House, which could vote on the bill and send it to Gov. Kay Ivey as soon as Tuesday.

Alabama is one of five states with no state funding for public transportation. As a result, the state leaves tens of millions of dollars of federal matching funds on the table every year. This lack of investment in public transportation makes it harder for thousands of Alabamians, especially seniors and people with disabilities, to meet basic needs like getting to work or the doctor’s office. It also poses a barrier to economic development and job creation. For those reasons and others, Arise members chose public transportation as one of our 2018 issue priorities.

SB 85 and HB 10 would not provide state public transportation funding, but they would create a landing place for future state or federal appropriations to support and expand public transportation options in Alabama. The Alabama Department of Economic and Community Affairs (ADECA) would administer the fund. Click here for more information on the bills.

Public transportation took another step forward Thursday when the Alabama Senate voted 26-0 for legislation to create an Alabama Public Transportation Trust Fund. SB 85, sponsored by Sen. Rodger Smitherman, D-Birmingham, moves to the House. A similar bill – HB 10, sponsored by Rep. Jack Williams, R-Vestavia Hills – won House committee approval last week.

Alabama is one of five states with no state funding for public transportation. As a result, the state leaves tens of millions of dollars of federal matching funds on the table every year. This lack of investment in public transportation makes it harder for thousands of Alabamians, especially seniors and people with disabilities, to meet basic needs like getting to work or the doctor’s office. It also poses a barrier to economic development and job creation.

SB 85 and HB 10 would not provide state public transportation funding, but they would create a landing place for future state or federal appropriations to support and expand public transportation options in Alabama. The Alabama Department of Economic and Community Affairs (ADECA) would administer the fund. Click here for more information on the bills.

Public transportation advocates in Alabama got a double dose of good news Thursday when bills to create an Alabama Public Transportation Trust Fund won committee approval in both the state House and Senate. Arise members chose creation of a trust fund as one of our 2018 issue priorities.

Alabama is one of five states with no state funding for public transportation. As a result, the state leaves tens of millions of dollars of federal matching funds on the table every year. This lack of investment in public transportation makes it harder for thousands of Alabamians, especially seniors and people with disabilities, to meet basic needs like getting to work or the doctor’s office. It also poses a barrier to economic development and job creation.

HB 10 and SB 85 would not provide state public transportation funding, but they would create a landing place for future state or federal appropriations to support and expand public transportation options in Alabama. The Alabama Department of Economic and Community Affairs (ADECA) would administer the fund. Click here for more information on the bills.

Alabama Medicaid had good news for legislators last week, but it won’t last long. Lower-than-expected prescription drug costs will help Medicaid carry $53 million forward into 2019, meaning the agency will need less General Fund (GF) money next year than initially expected, Medicaid Commissioner Stephanie Azar said during state GF budget hearings Thursday. But that still won’t solve Medicaid’s need for stable, adequate long-term support.

Medicaid funding is just one of many GF challenges for Arise and other advocates this year. In a move that would create new barriers to health care for many low-income households, Alabama may seek to increase copays and impose work requirements for some Medicaid patients. The future of federal funding for ALL Kids, which provides health coverage for more than 85,000 children across the state, remains uncertain. Alabama also faces a federal court order to invest more in mental health care and other health services in state prisons.

Those issues and many others stand against the backdrop of a GF that struggles with a long-term structural deficit. That means GF revenue growth is not strong enough to keep pace with ordinary cost growth for Medicaid, mental health care, corrections and other services.

But lawmakers may be able to get through this year without addressing those deeper budgetary problems. The GF will carry forward $129 million into next year, enough to cover most of the requested increases for Medicaid, mental health care and corrections if Congress provides full federal funding for ALL Kids over the next two years.

The Legislature will have to finalize budgets for both the GF and the Education Trust Fund during a fast-moving 2018 regular session, which began Tuesday and is expected to end in March.

Temporary ‘good news’ won’t solve long-term Medicaid funding woes

Medicaid provides health coverage for one in five Alabamians – most of whom are children, seniors, pregnant women, or people with disabilities. The federal government provides about 70 percent of Medicaid funding in Alabama. The rest comes from the GF (11 percent) and other state sources like provider taxes on hospitals, nursing homes and pharmacies (19 percent).

Medicaid received $806 million from the GF last year, of which $105 million was one-time money from the state’s share of the BP oil spill settlement. Medicaid’s 2019 GF request is for $757 million. That would be 6 percent less than the agency’s total GF allocation last year, but 8 percent more than the amount that Medicaid received out of recurring GF revenues.

The end of Medicaid’s regional care organization (RCO) initiative in July 2017 also drew great legislative interest during the hearings. Azar discussed an “RCO pivot,” which will preserve several features of the RCO plan, with a broader scope and some structural changes. The basic idea of coordinating patient care to produce better health outcomes will continue to drive the reforms, Azar said. But new federal rules will allow Alabama to include more categories of patients in the new system.

Like the RCOs, the “pivot” plan will build on existing care management initiatives known as “health homes,” Azar said. Health homes seek to cut costs and keep patients healthier by using primary care doctors to coordinate enrollees’ health care. Alabama Medicaid has operated health homes since three regional pilot projects launched in 2010.

Arise is committed to ensuring strong consumer oversight and community engagement in whatever shape the new Medicaid reforms take. In a written proposal to Medicaid last fall, Arise emphasized that our statutory responsibility to provide consumer representatives for RCO advisory committees and governing boards gave Arise and our partners at the Disabilities Leadership Coalition of Alabama both a wealth of experiential learning over the last three years and a team of trained appointees eager to participate in the transition.

Azar reaffirmed her support for consumer involvement after the budget hearing, but advocates must keep up the pressure to ensure that principle becomes reality. To that end, Arise and our allies will provide comments on the draft Medicaid reform plan when it is unveiled in coming weeks.

Arise will seek to minimize the harm from proposals to increase Medicaid copays and impose work requirements on some Medicaid beneficiaries. Azar mentioned the possibility of increasing Medicaid copays but offered few details, other than noting that federal law would limit them to no more than 5 percent of a household’s annual income. She also said it remains unclear whether it would cost the state more to implement such a program than it would raise in return.

Azar’s discussion of work requirements was much more robust. Alabama soon will request a federal waiver to impose a work requirement for Medicaid beneficiaries in the “Parent and Other Caretaker Relative” category, Azar said. That group includes about 75,000 of the more than 1 million Alabamians with Medicaid coverage. Caretaker responsibilities, disabilities and other factors preclude many of them from working outside the home.

On an encouraging note, Azar highlighted the importance of an “exclusion list” of circumstances that would exempt many members of this group from the requirement. The scope of such a list will be a primary focus of Arise’s advocacy.

The White House has welcomed states to impose or increase work requirements and other “personal responsibility” measures for Medicaid patients, and Alabama is moving in that direction. For the vast majority of people served by Alabama Medicaid – children, seniors, and people with disabilities – the expectation of employment is not appropriate.

ALL Kids’ future still in limbo as Congress drags feet on federal CHIP funding

Congress’ failure to provide long-term federal funding for the Children’s Health Insurance Program (CHIP) is another threat to affordable health care in Alabama. That inaction jeopardizes ALL Kids coverage for more than 85,000 Alabama children whose low- and moderate-income families earn too much to qualify for Medicaid.

ALL Kids’ future has been uncertain since long-term federal CHIP funding expired on Sept. 30, 2017. As available funding dwindled, ALL Kids in December announced that the program would end Feb. 1 without additional money. Congress approved temporary CHIP funding in December, which forestalled that move. But if the uncertainty continues, ALL Kids officials said Thursday, they will mail letters this month announcing that the program will freeze enrollment in February and terminate in March.

Under the Affordable Care Act, states have been receiving an enhanced federal match for their CHIPs, which in Alabama amounted to 100 percent federal funding. It remains unclear how Congress will handle this funding formula in a long-term funding plan. The Department of Public Health has requested an extra $53.6 million from the GF next year in case Congress requires Alabama to resume providing state matching money for ALL Kids.

For Medicaid, the loss of CHIP funding would mean that an additional 87,000 children whose Medicaid coverage is paid for by ALL Kids – but cannot legally be terminated – will move to the Medicaid budget. That would increase the state’s cost to cover those children.

Alabama was the first state to win approval for its CHIP when Congress created the program in the late 1990s. It has played a huge role in reducing the state’s rate of uninsured children from 20 percent then to just 2.4 percent today. Arise and other advocates urge Congress to honor this historic commitment by moving forward with a five-year plan for full CHIP funding without further delay.

Federal lawsuit to force more state investment in mental health care in prisons

Mental health care in Alabama prisons is “horrendously inadequate,” a federal judge ruled last summer. That led to an order for the state to solve the chronic understaffing in its prison system, particularly among corrections officers and mental health professionals. Corrections Commissioner Jeff Dunn has requested an additional $80 million in GF support over the next two years to address those issues.

Staffing in Alabama’s prison system is at only half of its expected level, Dunn told lawmakers Thursday. In some facilities, that number is as low as 30 percent, he said. Sentencing reforms have helped reduce the state’s prison overcrowding from 190 percent of designed capacity to 160 percent in recent years, but Alabama still has the nation’s “highest overcrowding percentage,” Dunn said.

State education funding up but still lower than a decade ago

Alabama’s education funding will be up again next year, but it still will be well below its inflation-adjusted level from 2008, before the Great Recession. The Education Trust Fund (ETF) funding cap for 2019 will be $6.6 billion. That’s $216 million, or 3.4 percent, higher than this year’s allocations. The Rolling Reserve Act sets the cap annually based on a moving average of the previous 15 years of ETF revenues. Gov. Kay Ivey’s proposed ETF and GF budgets include cost-of-living raises for both education employees and state employees.

The Alabama Legislature last week passed 2018 state budgets that once again fall short of meeting critical needs. While lawmakers avoided a repeat of last year’s General Fund (GF) crisis, which required a special session to resolve, the new budgets highlight structural flaws that will continue to hinder public services in our state until leaders and voters approve fundamental tax reform.

Medicaid dodged a bullet this year in the GF. The barebones program that underpins our entire statewide health system squeezed by with so-called level funding – the same roughly $700 million in state funds as last year – plus the second and final $105 million installment of BP oil spill settlement funds. The lack of an increase deepens concerns about the scaled-back launch of regional care organizations (RCOs), already delayed to October 1. Level funding for other GF agencies such as Mental Health, Public Health and Corrections leaves them ill-prepared for contingencies like lawsuits and outbreaks of illness.

On the Education Trust Fund (ETF) side, the picture is only slightly better. The ETF passed by the Legislature on May 18 increased funding for K-12 education by $24 million, allowing for the hiring of about 150 new, and much-needed, teachers for grades 4-6. It also increased funding by $13.2 million for Alabama’s well-regarded, but not universally available, pre-kindergarten program.

Alabama is unusual among states in that we have two major state budgets. The Education Trust Fund (ETF) supports public schools, community colleges and universities, along with a handful of public/private entities like Tuskegee University. The ETF also funds some state agencies that provide education-related services. The General Fund budget (GF) funds the rest of state government.

Alabama is also unusual in the extent to which we “earmark” our taxes, designating the purposes for which certain taxes may be spent. Our constitution earmarks most “growth” taxes – those that increase when the economy is good – to the Education Trust Fund (ETF). Examples of growth taxes are income and sales taxes. Many taxes that don’t grow with the economy are earmarked to the GF and, as a result, the GF fails to grow as the economy and the need grows over time.

The consequences of Alabama’s flawed tax and budget system are clearly visible in the new budgets. Most glaring is the Legislature’s failure to fund the state’s Medicaid program adequately. For the past two years, infusions of $105 million from the BP oil spill settlement have helped prevent massive Medicaid cuts. But this two-year boost, agreed upon during last year’s General Fund negotiations, leaves the state facing a funding cliff for a program that insures more than one in five Alabamians – mostly children, seniors and people with disabilities.

The 2018 GF Medicaid allocation of $701.4 million is still $42.2 million short of the Governor’s already inadequate funding request. At this level, Medicaid will be able to keep providing basic services, but its ability to proceed with regional care organization (RCO) reforms that would emphasize preventive care may be at risk. Alabama would give up $747 million in promised federal funds if it fails to implement RCO reforms.

Of the other GF agencies, only trial courts and the badly stressed juvenile probation officers (JPO) program received small increases ($1.3 million for the courts and $1.8 million for JPOs). But in neither case did increased funding keep pace with the increased need.

In the ETF, higher education received a $4.6 million increase, but nearly every dollar of this went to Alabama’s National Guard scholarship program. Costs for this program have grown very rapidly over recent years, restricting the Legislature’s ability to provide increases for other purposes in higher education. The 2018 ETF also provided a $26.4 million increase to Veterans Affairs for scholarships for disabled veterans, their spouses and their children. Responding to concerns about the rapidly rising costs of these scholarship programs, the Legislature passed SB315 by Senator Gerald Dial (R-Lineville), tightening scholarship eligibility and benefits. Community colleges, which provide much of the workforce development in the state, were essentially level funded, as was the Department of Commerce’s workforce development program.

The Department of Mental Health received $3.5 million more from ETF than in 2017, but this was much less than the $10.5 needed to settle the anticipated lawsuit over mental health services for low-income children. For the first time, the stretched-thin juvenile probation officers program received a small ETF appropriation of $750,000 for truancy enforcement services.

A third way in which Alabama’s budget is unusual is that the ETF’s Rolling Reserve statute has imposed an artificial cap that restricts how much can be appropriated to education, even if additional revenue is available. Funds available above that cap can be given to K-12 schools and universities for one-time infrastructure and technology expenditures. SB307 by Senator Arthur Orr (R-Decatur), passed on May 19, makes $15 million available to universities from the Education Technology fund and $41.3 million for K-12 for technology, buses and other infrastructure needs.

Avoiding an emergency special session to fill a budget gap is a very low bar for legislative success. Even worse is Alabama’s habit of defining “level funding” as “same dollar amount.” A better practice is to calculate a “current services budget” that keeps up with inflation and population growth. Only a bold move on tax reform can stop the steady deterioration caused by inadequate budgets year after year.